The Finance Professionals' Post educates readers in the finance and banking sectors on the forces that shape their business. The FPP is a publication of the New York Society of Security Analysts (NYSSA).

Commentary

11/19/2014

Wordiness is a curse. Long-winded writing obscures your meaning and scares off readers. However, many writers don’t realize that their writing drags on endlessly.

A free online tool—the Hemingway App—can help you recognize when your sentences are too long. Hemingway will highlight them, and also suggests some ways to improve your writing. You could identify long sentences using your word processing software, but Hemingway is easier to use.

10/29/2014

The job market for equity research in 2014 is highly competitive. What with across-the-board consolidation, tightening regulation, and a slimmed down banking sector, how can a candidate stand out given the crowded, narrow space?

Increasingly, specialization is sought after. Sector focus—rather than a generalist background—is more favorable, be it in biotechnology, insurance, or any niche.

10/20/2014

Contrary to the wishes of originalists, the U.S. Constitution evolves. However, it evolves in strange, almost incomprehensible ways.

For instance, the reach of the First and Second Amendments has increased drastically. The “freedom of speech” clause in the First Amendment, once admitting restrictive Comstock obscenity laws, now has extended to freedom (and anonymity) of money spent by corporations on political advertising, thanks to the Supreme Court’s ruling in Citizens United. The Second Amendment entitles every citizen, age and mental state notwithstanding, to obtain firepower on the scale of a post–Revolutionary War battalion—and much more accurate at that.

10/15/2014

Henrik O. Madsen joined Norway’s DNV, the world’s leading ship and offshore classification company, in 1982. Thirty-two years later, as Group CEO of the recently merged DNV GL, now a Euro 2.5 billion global enterprise, Henrik made a speech few CEOs will ever have the opportunity to attempt.

10/07/2014

Plain language makes your documents more appealing and easier to understand. But circumstances may require you to use jargon. For example, you may be a financial marketer or professional working for bosses or departments that insist on using technical or unfamiliar terms. You can help reader comprehension by explaining the term in the sentence where it first appears. Parenthetical explanations are useful, whether you literally enclose the explanation in parentheses or set it off using some other technique.

10/05/2014

For individual investors seeking advice, the world they enter can be a confusing place. I’m thinking here of the different types of financial advisors that offer to help investors deploy their capital. Non-finance people shouldn’t need to bother themselves with subtle elements of the investing regulatory landscape, but there are some things they’re better off knowing. Financial advisors don’t all operate with the same set of objectives. Some, who work for investment advisory firms and are Registered Investment Advisors (RIAs) are bound by the 1940 Investment Advisors Act to conduct themselves as a fiduciary, meaning they’re legally obliged to put their clients’ interests first. It seems like a sensible standard, but it’s not the only standard. There’s another class of financial advisor who work for broker-dealers rather than investment advisory firms. Their activities are bound by a lower standard of suitability and disclosure.

06/25/2014

It is instructive to observe the reaction to the Piketty phenomenon — a 700-page treatise on political economy that became an overnight Amazon bestseller deserving, according to Larry Summers, of a Nobel Prize. It is similarly instructive to note the spectacle of the viral Russell Brand interview with the BBC’s Jeremy Paxman in which Brand pretty much shreds Paxman and calls for revolution. I can’t claim to have actually read Piketty’s tome, but I’ve read a lot of the reviews, and I have watched the Russell Brand video. Regardless of where you come down on their arguments, the response to Piketty’s book and the wide appeal of Brand’s rant taken together tell us that trouble is brewing.

06/23/2014

Most financial firms in the present day would need an overhaul of their current collateral management practices. This comes in the midst of the burden being experienced by an already intensely regulated financial industry and the new measures of regulation on OTC derivatives in the post financial crisis world. The costs of regulation are near-crippling to some firms. Big dealers are planning to exit or divest certain lines of business that will face huge operational costs as a result of regulation, and are no longer deemed profitable.

05/05/2014

The dark side of the world of algorithmic trading in financial markets has twice been in the spotlight this week. First was the release of Michael Lewis' explosive new book, Flash Boys: Cracking the Money Code, which highlights many worrying practices in a sector that accounts for about half of all trades on the New York and London Stock Exchanges. Second was the FBI's announcement on April 2 that it would begin a criminal investigation into wrongdoing in the sector.

04/10/2014

It's the second fastest growing economy in the world: Strong economic growth is expected for the mineral resource–rich Mongolia, with rising mining output from world-class mining projects such as Oyu Tolgoi—a copper and gold mining operation, where Rio-tinto owns 66% and the government owns 33%. This project is expected to contribute 1/3 of Mongolia GDP alone. The Economist Intelligence Unit has projected that Mongolia will be the second-fastest growing economy in the world in 2014 with gross domestic product rising 15.3% thanks to the first full year of operations of Oyu Tolgoi. And, though IMF predicts that growth will slow down to 9.5% (owing to a slow-down in China, the main export destination for Mongolian minerals), the economic growth is high even by regional, let alone international, standards.

03/24/2014

Janet Yellen surprised almost everyone on March 19 by speaking off-script and providing forward policy guidance that can undermine the Fed’s credibility, at best, or cause another crisis, at worst. If the economic data comes in weak by the end of tapering and the markets swoon, the Fed will have no choice but to implicitly admit it was wrong and keep interest rates close to zero indefinitely. However, if the Fed continues with its plan to raise rates in the face of a weaker economy and declining market, the actions may cause another violent crash.

Zero short-term rates and the first round of QE were essential to avoid a complete financial meltdown. Subsequent rounds did little for the real economy yet unintentionally produced high leverage and asset bubbles in various places by providing cheap financing for companies, investors, and speculators alike. The policy also resulted in a massive transfer of wealth from labor to asset owners leading to the largest wealth and income inequality in recent history.

03/17/2014

A news page featuring your firm’s mentions in the media can boost your credibility as long as you avoid one financial advisor’s mistake.

“Wow! This advisor hasn’t gotten any press since 2006.” That was my first thought when I looked at this advisor’s news page earlier this year. I immediately thought, “He should delete his news page.”

But then I scanned the rest of the page. I realized that the advisor had listed his media coverage in chronological order. He started in 2006 and continued up to the present day way, way down the page.

Unfortunately, most readers won’t scan the entire page. They’ll stop with the misperception that the advisor is a dud at getting the attention of the press.

The lesson for you? List your news coverage in reverse chronological order, putting the most recent items at the top of your page. For an example, see my “In the News” page.

03/10/2014

When I worked at JPMorgan in the 80s and 90s, even in the context of deregulation, the concept of “self-regulation” in the financial industry was discussed with a straight face.

Last week, Better Markets, a sophisticated civil society non-profit organization, run by former Skadden attorney Dennis Kelleher and committed to protecting the public interest in the government’s regulatory response to the financial crisis, filed a lawsuit against the Justice Department and Attorney General Eric Holder. The suit seeks to block what Better Markets calls an “unlawful” $13 billion settlement with JPMorgan Chase & Co. over bad mortgage loans sold to investors leading up to the crisis. We now have lawyers suing the United States Attorney General on the public’s behalf for failing to properly prosecute a record $13 billion settlement on the nation’s most powerful and flagrant abuser of the self-regulation ethic.

02/17/2014

This year’s gathering of the World Economic Forum at Davos was kicked off with the reading of a letter from Pope Francis, which ends: “I ask you to ensure that humanity is served by wealth and not ruled by it.” One can almost feel the squirming.

I recently participated in a roundtable among leading thinkers, activists, and social entrepreneurs on the need to put "system change" not just problem-solving on the agenda in places like Davos. This discussion is not about capitalism versus socialism. No existing system, not social democracies nor communist states, operate sustainably. As is often the case in these discussions, the inevitable and emotion-packed debate on priorities emerged.

01/27/2014

My name is Scott, and in the summer of 2011, I passed my CFA Level I with just 2 weeks worth of studying. <

I started two Saturdays away from the actual test having done no more than a cursory glance at my books beforehand. And somehow, incredibly, I managed to pass. Zee wrote to me one day asking if I'd like to share my story with 300 Hours readers, and over the course of the Christmas holidays, I wrote my experience down.

Here is my story.

An Important Success Factor: My Job and Education

I believe a significant factor that allowed me to pull this off was my background, both in work and education.

I read Economics at Oxford and did pretty well - that helped me save time in some of the basics of CFA Level I. I was also a management consultant for investment banks and wealth managers. Consultant projects range from several weeks to several months, and having 3 years experience at the time, I had a wide range of knowledge and expertise across several financial sectors.

I didn't choose to attempt to take CFA Level I with only two weeks' prep - I basically had no other choice.

My biggest mistake was to underestimate how little time and drive I would have for the exams. I always did well in exams in the past and thought that this would be just like the others. Although the exam itself was probably not too different in difficulty, balancing it with work was the problem.

I was rammed with a high-pressure project about 3 months before the exam, working 80-100 hour weeks. This meant that I didn't have any time to do anything else, never mind think about studying for the CFA exams. As the exams approached, I had two choices - either forgo the exam and waste the money I paid for the signup fees and materials, or try and pass with by the skin of my teeth.

Two weeks before E-day, I chose to push for it and see what happens.

My Two Weeks of Studying Hell

I took a full 10 working days off to study for the CFA Level I. That was already a very painful sacrifice, but nothing compared to what I had to endure in the following two weeks.

Through the entire two weeks, I dedicated all of my time to studying. I didn't leave my flat and lived off takeout meals. I had told my friends, girlfriend and parents that I would be incommunicado for two weeks so I didn't speak to any of them either, save for a few online chats here and there. Basically I became a hobo for two weeks in my own home.

And what did I get done? I'd say there were 3 important things that I got right, given my situation.

12/16/2013

At a time when institutions of business and government continue to fail society, two of our leading academic institutions missed the opportunity to provide essential moral leadership on the most pressing challenge ever faced in the history of human civilization.

Harvard President Drew Faust issued her October statement first: She and her colleagues on the Board do not believe “that university divestment from the fossil fuel industry is warranted or wise.”

Brown President Christina Paxson followed three weeks later with her own statement: “Our consideration of divestment [from coal] is over.”

12/02/2013

“As stimulus tab rises for Fed, worries grow it may require a bailout” is the title of an article published in Los Angeles Times and blogged in CFA Institute's "Future of Finance."

I'll say it bluntly: This is nonsense. The logic goes that as interest rates rise, the value of the bonds on the Fed's balance sheet lose value and the central bank will be bankrupt—requiring the taxpayers to bail it out. This is wrong on many different levels.

10/02/2013

One
Eastern fable tells of animals that want to build a bridge to greener pastures.
The elephant proposes to build a wide, strong bridge, the bunny wants to build a
light one, and so on. The jackass says that the group should decide whether to
build the bridge across or along the river.

Sitting in the midst of the
Marcellus shale, considering the debates between energy companies and
environmentalists about the costs and benefits of fracking, I develop a feeling
similar to the donkey’s. The proponents of fracking emphasize the supposed
contribution of a cheap “natural” gas to the national economy.
Environmentalists concentrate on the emission of greenhouse gases and the
pollution of streams and water tables. Yet I have not been able to find an
answer to a simple question, one that I formulated long ago: is fracked gas (a
product of underground gasification of hydrocarbon-saturated shale—I call it
“shale gas” below) a complete substitute
for natural gas that comes from traditional sources (“wellhead gas”)?

09/30/2013

What is it about a Woody Allen film that leaves us always with a discomforting feeling of identification with its most abysmal character? This is certainly true with his latest film “Blue Jasmine,” which initially disappointed me, Kate Blanchett’s hauntingly brilliant performance notwithstanding. But given a little more time and reflection, its deeply disquieting meaning slowly seeped in.

I began to realize that it was more than an overdone cliché about a greedy Wall Street huckster who lavishes “everything one could want” on his attractive and well-kept wife “Jasmine,” who never asks or wants to know the true source of all that “success.” Easier to shop and party on Park Avenue and in the Hamptons as a socialite dripping platitudes about responsibility for “helping poor people.” Her husband “Hal” is a younger and flashier Bernie Madoff, higher up the Wall Street food chain perhaps, but nothing more than a sociopathic shyster, serially cheating on his complicit wife whom we cannot help but associate with Ruth Madoff.

09/23/2013

Fed’s response to the financial crisis created winners and
losers. Ultimately it produced a massive transfer of wealth from savers and conservative
investors to financial intermediaries, corporations, and risk takers. Retirees and
others who traditionally relied on modest and reliable interest received to
generate cash income or grow their wealth have suffered an extended period of
zero returns while the value of cash is eroded by inflation. Moreover, losses
experienced during the crisis removed the risk-taking ability of many investors
forced to move to safety.

The “yield famine” represents years of lost returns for
savers and investors unwilling or unable to take risk. With the economy still
operating below potential, and unemployment being reduced only slowly,
short-term interest rates are likely to remain exceedingly low well into the
future. Add massive government debt comparable to levels after World War II and
“financial repression” is
virtually guaranteed for decades. Low rates will continue to keep savers hungry
while subsidizing the government, the financial system and the corporations. Meanwhile,
profits at the largest US banks are now the highest they have been in history.

Institutions and individuals holding assets in banks and low-yielding
funds would be wise to invest directly in the same way that banks do. Cutting
out the middleman would provide them with a similar level of safety that banks
enjoy, yet generate substantially higher returns. However, doing so requires,
first and foremost, the knowledge to find the right opportunities coupled with the
courage to move out of the comfort zone and take a modest level of risk. Investors with
diversified portfolios across the risk spectrum might also find it rewarding to
reallocate both ultra low−risk and very high−risk assets into moderate-risk assets with superior
risk-adjusted returns.

The Conference, hosted by NYSSA Private Wealth Management
Committee on October 1st, 2013, presents a menu of choices available
for generating income from various sources. Topics of presentations include:
expanding outside the US into the global bond market, using equities for income
and growth, a look at the advantages of preferred stocks, visiting synthetic
bonds, evaluating the risks and returns of muni bonds, and sampling Master
Limited Partnerships and Business Development Companies.

ZIRP

Federal Reserve and its Chairman are often praised for the
swift and forceful response to the financial crisis, which helped avoid a
repeat of the Great Depression. Both conventional and unconventional monetary
policy actions were used to increase liquidity, shore up the financial system,
stimulate the economy, and reduce the high level of unemployment. Reducing the overnight
borrowing rates is a standard conventional policy response and the Fed, unlike
other central banks, took the bold step of reducing this rate to near zero.

The zero interest rate policy (ZIRP), along with infusions
of cash, saved the financial system from imminent collapse in 2008. Since then,
“too big to fail” institutions along with their thousands of smaller brethren
were able to borrow at infinitesimal rates. Such ample liquidity and low rates
propagate through the system, and determine
the rates of all other ultra-safe, short-term lending and borrowing such as
Treasury bills and commercial paper. In turn, these rates determine the
interest paid on so-called Money Market funds and bank accounts as well as
interest on short-term Certificates of Deposit or Bank Savings Accounts.

LONG LASTING

Short-term interest rates are unlikely to rise by any
substantial amount in the near future for a few reasons: continued quantitative easing,
massive government debt, and demographics. Quantitative easing (QE) is an
extension of the conventional monetary policy using interest rates. Most
likely, an increase of the Fed Funds Rate would have to be preceded by the
complete stop of Fed’s asset purchases. There should also be a reasonable
belief that no further QE would be needed. Since the Fed is just beginning to
consider a “taper” from the $85 billion per month in purchases, a lasting and
complete QE stop may be a long way off. It is also possible that the Fed may
wish to unwind at least a portion of its balance sheet before raising rates.
This would push the time to raise rates further into the future.

Government debt has more than doubled since the crisis and
now stands at 16.7 trillion or about 100% of GDP. Such high levels of
debt-to-GDP have not been seen since the end of the Second World War.
Government’s massive borrowing gives it a strong incentive to keep the interest
rate it pays as low as possible to avoid piling on even more debt. With most of
the government borrowing concentrated in short-term securities, it is in its
best interest to have short-term rates close to zero. Fed’s independence would not
be a barrier if it acted in the interest of the country and kept rates low. In
the 1940’s and 50’s, interest rates well below the rate of inflation amounted
to what is now known as Financial Repression. History appears to be repeating.

Lastly, demographic changes in the US, as a result of
retiring baby boomers, present serious economic challenges. Lower consumption
levels reduce the rate of growth while future promises in entitlements are
estimated at a gigantic $200 trillion, according to some .
The economy is unlikely to have such hypergrowth to support those levels of spending.
Thus, the government debt is likely to start increasing massively by the end of
the decade. Larger debt is likely to extend financial repression much further
into the future while inflation is likely to rise.

FAMINE

The objective of yield-oriented investors is to generate a
steady cash flow from a moderate return with a high degree of safety of the
principal capital invested. This applies primarily to retirees who need a
relatively fixed income for living expenses. It is well known that a loss of
principal account value, especially in the early years of retirement, can have
very negative or even devastating consequences in one’s ability to fund future
needs. This is because assets get depleted quickly at low valuations and can no
longer recover from a low base.

Years of missed returns cause serious setbacks and greatly
increase the risk of running out of money during lifetime. Many institutional
investors such as endowments, foundations, and pension plans have substantial
assets in safe investments. An extended period of near zero returns impairs the
ability to meet their objectives and in some cases can even threaten their
long-term viability.

Ultra-safe investments caused investors to experience a
yield famine. The Great Irish Famine in the mid-nineteenth century caused a
massive death toll, disease, and misery because the majority of the population
became almost entirely dependent on a single source of food: the Irish Lumper
potato. Ironically, even during the famine, the country overall produced enough
food to feed its people. Starvation occurred because the food produced within
the country did not get to the people, for
various political and economic reasons,. Likewise, there appears to be a
sufficient amount of yield in the investment universe today. However, for different
reasons, it is not getting to a large category of investors.

FEAST

While depositors are starved for yield, the financial
industry continues to feast. Profits at big banks and financial institutions
have recovered quickly after the crisis and are making new highs again. This is
in spite of the fact that banks are quite inefficient and have high costs. Running
a large bank is an expensive operation that includes rents for headquarters and
branches, expensive internal systems, regulatory overhead, and large salaries
and bonuses paid to senior staff and executives.

Ironically, after having been one of the principal causes of
the crisis, the financial sector is now reaping 30% of all domestic corporate
profits while contributing only 8% to GDP. As the chart below shows, on a
percent of GDP basis, the Financial Profits are at all-time highs. Clearly,
financial institutions are having a profit bonanza and getting more than their
fair share from the income pie. Largely because of the Fed policy, their
profits are subsidized by depositors who lend money at zero interest.

Based on these facts one would deduce that investing in
banks should produce outstanding results. Nonetheless, experience shows that stocks
of the financial companies have not been on par with the expectations. Why the
difference? One explanation is that a large part of the profits since 2007 has
gone to fight alleged misbehavior. According to Bloomberg, the six largest
banks in the US paid $103 billion in legal costs and settlements with the
regulators for selling shoddy mortgages, misleading investors, or manipulating
the LIBOR rate. By comparison, their total payout in dividends to shareholders
of common and preferred stock amounts to $98.6 billion during the same time.

OPTIMIZING BALANCE SHEETS

Given the dire state of affairs for savers, one would assume
that a large part of them would revolt and vote with their feet. However,
paradoxically perhaps, the amount of money on deposit with the banks has increased
by 70% from $4 trillion to $6.8 trillion between 2008 and 2012. It appears that
businesses, institutions, and individuals are making this voluntary decision
because they either too scared, don’t fully understand the consequences, are
unaware of other choices, or are simply complacent.

Most people automatically associate investing with the stock
market. This is an incorrect view since every held asset type and liability
(such as mortgage or credit card debt) should be considered. For example cash
in a bank account is an investment losing value because of inflation. Business
or personal debt is an investment choice that can earn the interest rate
currently being paid to the lender. For example, a business paying 7% interest
on a loan can “invest” in its own debt by paying it off. Importantly, this is a
risk-free rate of return for that business.

Mental accounting biases are likely responsible for viewing investment
accounts separately from cash and from debt. Instead of thinking in terms of managing investments, both advisors and
investors should be thinking of managing
balance sheets.

Typical balance sheets tend to be suboptimal. Investors
holding cash and low-yield assets while simultaneously having debt are
subsidizing the financial system. Some
low-yield assets may be hidden in the portfolio inside money-market funds or
diversified bond funds. Investors may have much higher allocations than they
are aware of in such assets. Well-diversified portfolios also tend to have a
portion of assets in high-risk investments or strategies. The high-risk part of
the portfolio tends to underperform more conservative investments on a
risk-adjusted basis. (Reasons for such underperformance can be the object of
another analysis.)

Both low-yield allocations and high-risk allocations can generate
a serious drag on the balance sheet performance. As a general rule, investors
should avoid extremes and reallocate these types of holdings to value
investments with moderate risk and positive expected real rates of return.
Investors may be surprised to find that the overall risk of their balance sheet
may remain nearly the same, while long-term returns could be substantially
higher.

Because of the highly profitable nature of the banking
business, investors can learn a great deal from the way these financial
institutions are managing their own investment portfolios. Moreover, by
understanding that the principal role of the Fed is to deal with financial
crises and protect the banking system investors can have a higher degree of confidence
in their investment strategy of following the model of financial institutions.

Astute investors are able to find opportunities for attractive
yield and returns from different sources:

Bypassing banks and investing in similar ways by
lending to consumers, governments, municipalities, and businesses.

Implementing strategies used by financial
institutions, including capturing the spread between short term and long term
interest rates, insuring risk, purchasing securities at a discount, and
capturing premiums for illiquid investments.

Lending to banks by investing in the bonds or
preferred stock issued by banks and other financial institutions.

The “great rotation” that many speak about does not have to
be from fixed income to equities but rather from a yield famine to real return.

–Robert Andriano, CFA is the Chief Investment Officer of Pure
Investment Advisers, Inc., a boutique investment management firm specializing
in portfolio management and comprehensive balance-sheet optimization. For more
information please visit the company website at www.pureinv.com

As an impartial, nonprofit
forum for the finance and banking industries NYSSA encourages discussion and debate among
its member and other professionals. Commentaries, however, should be taken as the sole
opinion of the author(s) and not of NYSSA. If you would like to submit a commentary to the
Finance Professional's Post, send your article to the editor.

08/28/2013

(This post is the third in an occasional series on why stronger oversight of commodity markets must be a public policy priority.)

JPMorgan has announced that it plans to exit the physical commodities businesses, while remaining committed to its historic roots in commodity financing and risk management, and to the precious metals business. Is this Jamie Dimon recognizing an unstoppable paradigm shift now taking place in the financial sector as policymakers finally find the political will to reign in the power of too big to fail banks?

08/21/2013

What better way to close my CFA exam journey than by
sharing my Level III study strategies, which helped me pass the June
2013 exam?

My first two articles talked about my CFA Level I exam
experience and my third article talked about how my study strategies changed
from Level I to Level II. So, this article focus on the changes (in detail) I made to surmount the difficulty of Level III materials and the essay exam format of the morning section. Hopefully, this will inspire current and/or future CFA candidates to pay special attention to their study strategies.

05/16/2013

Chances, are, you saw it coming. You no longer have a job. Technology, globalization, and fierce
competition have created a tough job market. Downsizing. Re-aligning. Right sizing. Regardless of the
cold corporate rhetoric, to protect yourself you must have an action plan.

Here are survival strategies to help put you back in charge
of your career.

04/24/2013

In Part I of this
article, I discussed cutting-edge research in nanophotonics from the Kavli
Institute of Nanoscience Delft in Holland, the University of California,
Berkeley, and Massachusetts Institute of Technology (MIT). In Part II, I review
more practical achievements, which I have placed into two categories:
Lab-to-Fab, for research in need of commercialization, and Prêt-à-Porter, for
currently available commercial products. I have chosen most of the technologies
and devices from among Laser Focus World
magazine’s list of the top 20 photonics innovations of 2012 (Wallace 2012), and
from the highlights of the SPIE Photonics West 2013 conference in San Francisco.
Despite the diversity of the technologies, they can be further classified
according to three recurring themes: multispectral and broadband applications;
terahertz technologies; and green, bio-optical, and acoustic engineering.

04/17/2013

In 2010, I reviewed six companies
recognized by The Wall Street Journal
in its Technology Innovation Awards (see Totty 2010 for awards and Lerner 2010
for review).

Most of these companies were in the
field of optics and photonics. Since then, I have rarely touched domestic
equity markets, but it is time to return to them. The defense sector is the largest
consumer of electro-optic devices, and with significant cuts to the US defense
budget looming in 2013, investors would be wise to look at alternative
applications of photonic technology.

This
time, again to avoid personal bias, I have chosen technologies from Laser Focus World magazine’s list of the
top 20 photonics innovations of 2012 (Wallace 2012). I have had to omit some
developments from my review due to my inability to understand the underlying
technologies and the magazine’s inclusion of purely manufacturing-related
advances that hold little new technological content. Laser Focus World’s list is divided into four sections: Looking
around Corners, Controlling Light, Sensing Redefined, and the Photonics Toolbox
(the last section deals mainly with manufacturing techniques). I have used a
different classification: Cutting Edge, Lab to Fab, and Prêt-à-Porter.

03/11/2013

If you don't have a finance-related background, are you disadvantaged when it comes to the CFA exams?

In the December 2012 exams, we set out to find some clues to shed some light on just that. In our Analyze Results tool, we now include a question where candidates can input their work and education background, indicating whether their backgrounds were finance-related or not.

Given enough of a sample size, we could then compare the various background profiles with pass rates, and see how pass rates varied across candidates that had different backgrounds in work and education.

03/04/2013

My daughter and I joined an
estimated 50,000 demonstrators in Washington, D.C. marching against the XL
Pipeline that would connect the Canadian Tar Sands to American refineries. After a half century on this planet, I took
to the streets. Here’s why.

02/27/2013

It is with great pleasure that the Career Development Committee announces a monthly reading recommendation as our newest offering. To fulfill NYSSA’s mission to foster the interchange of ideas and information, we will recommend books, journals, and scholarly articles that we believe will support you in your career advancement. We hope that you will enjoy these readings and find them as beneficial as we do.

02/11/2013

After apologizing at Davos—but only to his shareholders—according to William Cohan on the Bloomberg View, the JPMorgan Chairman and CEO hastened to add about 2012, “We did have record profits. Life goes on.”

It is true; JPMorgan reported a strong financial performance in 2012, “London Whale” trading fiasco notwithstanding. I must admit that despite my 18 years inside the firm (when it had a meager $300 billion balance sheet), I struggle to comprehend $100 billion of revenues, and a $2.3 trillion balance sheet, with an “off-balance sheet” managed by a few handfuls of mostly male, mostly 30-something traders that is many orders of magnitude larger. Maybe I’m a dinosaur. Life goes on.

02/07/2013

After visiting an awe-inspiring women’s empowerment program at work in several rural villages north of Delhi, our host at the Ashram, scanning his Blackberry, related the news: a horrific shooting…assault rifle…children slaughtered…in a school…in Connecticut (my son’s school is in the state)…and then after what seemed like an endless pause as I grew more anxious…Newtown.

12/10/2012

Public confidence in the integrity of equity trading markets appears to be at a
once-in-a-generation low. The flash crash, the 45-minute path to near-insolvency at Knight
Trading, and the large losses for investors in Facebook have not instilled confidence that
the public can engage fairly in US equity markets.

12/05/2012

Of all horsemen of the Apocalypse, Famine has the most connection with economics. The
final death toll in most famines is mostly determined by another horseman, Pestilence,
which follows famines through many obvious and less obvious channels. My purpose is a
study of economic, not medical, history, so I’ll refer to “famine,” although most excess
deaths can be attributed to epidemics.

12/03/2012

Now that Wall Street’s huge bet on presidential candidate Mitt Romney has
failed, banks face four more years of a less than sympathetic ear in the Oval Office.

The world’s major capital market banks are in bad shape. They are trading well below book
value, were recently downgraded and the majority of them have failed for more than two
years to earn a return on equity greater than its cost.

Seven of the top 10 banks have had chief executive changes since 2009, three of these
being made “effective immediately.”

In 1944, the famous political economist Karl Polanyi explained the root cause of WW II
when he wrote in The Great Transformation, “The true nature of the international
(economic) system under which we were living was not realized until it failed.” Similarly,
mainstream economists and finance theorists still do not get the vital interconnection
between the true nature of the (economic) system under which we are living, and healthy
ecosystem function. What will it take?

10/16/2012

Last month, the Dow, S&P 500, and Russell 2000 were all up 4-6%. After that round of QE, everyone in the financial markets and mainstream media seemingly cheered.

“It’s clear that the global leaders are doing all they can to combat the slow economy…we look forward to a strong year-end rally,” Ryan Detrick, chief technical strategist at Schaeffer’s Investment Research said on CNBC.

10/02/2012

Last month, Robert Frank began his column in the New York Times with this sentence: “There may be no topic that more reliably divides liberals and conservatives than the relationship between success and luck.” The first few paragraphs of the piece—and the last few—had a political flavor to them. Like an Oreo cookie, the good stuff was in between.

I suppose you might find it hard to believe that the “good stuff” was academic research by three sociologists. The researchers had participants in their study rate the quality of songs that they previously had not heard. The bottom line: Their judgments were distinctly different depending on whether they received information about how others had already rated a particular song.

09/26/2012

It is almost inevitable that at some point in your life you will have to borrow money to make necessary purchases. Items that are synonymous with the phrase, “We need a loan,” are typically major financial obligations such as a home, car, or college education.

According to the Federal Reserve System, there was $12.9 trillion in household debt outstanding at the end of the first quarter of 2012. Meanwhile, as of August 2012, the Federal Reserve Bank of New York reports household indebtedness at $11.38 trillion. The bank also reported that student loan debt rose to $914 billion last quarter.

09/24/2012

By now, CFA candidates know whether or not they have passed or failed. If you didn't pass this time, don't take it too badly. If you retake, use the hundreds of pre-preparation hours as an advantage.

Of course, after results day, there's a shift in terms of candidacy statuses. For those of you who either passed or are retaking level I this December, you may be thinking about how you can best leverage your CFA status to spruce up your CV. However, one very important factor to bear in mind are the ethics and professional standards set up by CFA Institute on stating such things on your CV. Without knowing it, many candidates are in violation of these bylaws and could be sanctioned by CFA Institute.

09/20/2012

I wanted to get started on my preparation for June 2013 Level II and saw you had recommended doing the CFA curriculum readings (with exception to Ethics) post–Labor Day through December. Do you also recommend doing the accompanying problem sets with the readings or saving those for later (i.e. Jan–May) when I would also use the prep provider materials (i.e. Schweser)?

09/17/2012

If you're new to the CFA exams, hopefully by now you're aware of how important mastering ethics is to your CFA studies. In an effort to help, here are three steps to ensure you are on the right path to nailing the ethics section in the exam.

09/12/2012

The Eurozone has changed; it’s very apparent. In the last year or so, the playing field has been tipped with mountainous debt problems that Greece, and now Spain and Italy, are experiencing. Of course, all of Europe will experience a huge knock-on effect from the problems in Greece and Spain—but the question is, by how much? If the Euro fails, will all hell break loose? This article outlines some of the possible outcomes of the current Euro crisis.

08/29/2012

Former New York Governor Eliot Spitzer recently joined NYSSA for an interview with Bloomberg Television anchor, Pimm Fox. Spitzer gave his observations and opinions about the top regulators of the current economic recovery effort—Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke.

On Ben Bernanke:

Bernanke is "the last man standing." He is the only one who has been willing to make the hard economic decisions as policymakers have remained in gridlock.

He has used monetary policy to the fullest extent, but now there is little more that he can do.

On Timothy Geithner:

Geithner did not have an adequate understanding of the structural failures that existed in the financial services sector.

After the financial crisis of 2008, Geithner did not request enough from the banks in return for being bailed out. He simply did not comprehend how much reform was actually needed.